Ellison Tries to Talk Down BEA Stock

Oracle kingpin Larry Ellison told analysts yesterday that his company is no longer interested in buying BEA — at least not at an asking price of $17 per share or higher — and that Oracle would be more inclined to explore other acquisition alternatives.

Wearing his tough-guy persona like a comfortable shoe, Ellison sent a message that he would be playing hardball with BEA henceforth. The question, though, is how much of Ellison’s belligerence is posturing and how much is real? I’d say it’s a case of at least 90% posturing, probably more.

The fact are these: Oracle wants to buy BEA, and BEA’s board of directors is willing to approve a sale at a price it can countenance. It’s also true that BEA is unlikely to attract another serious bidder; there’s little chance of a white-knight scenario transpiring. What has to happen now is a meeting of the minds, and pocketbooks, between Oracle and BEA. Despite Ellison’s bluster, that’s likely to happen, with the deal eventually going down at a price between the $21 per share BEA wants and the $17 per share Oracle has offered.

As often is the case in the technology business, big egos are involved. Ellison’s ego is among the biggest in the industry. Sometimes reason loses out to megalomania. But don’t bet on it it this time. I would not be surprised to see a deal done for about $19 per share.